Legg Mason Special Investment Trust

Investment Objective

Capital appreciation.

Investment Strategy

Focusing on small- to mid-cap companies or special situations

• Seeks primarily mid-capitalization stocks that appear to be undervalued and secondarily stocks of companies facing special situations such as unusual or possibly one-time developments that the manager believes make them attractive for investment.

Traditional and untraditional valuation measures

• Our analytical approach is not based on traditional, accounting-based valuation measures. We are focused on cash earnings - namely, the present value of future cash flows of a company. Shareholder value is the result of cash, not accounting, earnings. In this way, we believe we differ from most value managers. Traditional valuation measures miss many mispriced stocks because those measures do not focus on the value of a business.

Investment Risks

Market risk

The risk that prices of securities will go down because of the interplay of market forces.

Value-style risk

The value approach to investing involves the risk that those stocks deemed to be undervalued by the portfolio manager may remain undervalued.

Small and mid-sized companies securities risk

Smaller companies may involve higher risk than a fund that invests in larger, more established companies. Smaller companies may have limited product lines, markets or financial resources.

High yield bond risk

High yield bonds involve greater credit and liquidity risk than investment grade bonds.

Concentration risk

The Fund may focus its investments in certain regions or industries, thereby increasing its potential vulnerability to market volatility. Because this Fund expects to hold a concentrated portfolio of a limited number of securities, a decline in the value of these investments would cause the Fund's overall value to decline to a greater degree than a less concentrated portfolio.

Investment Management

Managed by Legg Mason Capital Management

• Since 1982, invests in companies that appear to be selling at significant discounts to their intrinsic value.
• The Fund is managed by Sam Peters, CFA, who has over 15 years of investment industry experience.